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SME Design Principles: What Works in SME Management and Leadership Development



1) Engage with the identity and interests of the manager

For managers in SMEs, learning becomes meaningful when it is strongly related to their concerns, problems and desires. It is important to explore the situation they are in and how this has come about. Every manager will have a story of who they are, how they come to be where they are and, possibly, what they are trying to achieve. The organisations they manage and lead are something that they personally value, both emotionally and financially. There may also be a long history to their position and this needs to be appreciated. Abstract concepts are unhelpful if they do not form part of the sense-making activities which help managers and relate to the image of themselves as leaders. They are also often very sceptical, if not cynical, about outside help and certainly sensitive to exposing potential 'weakness'. It is therefore also
fundamental to gain confidence, mutual respect and trust as well as establish perspective and relativity.

2) Understand the context and build from it

The lived experience of the SME manager both shapes and is shaped by the context of the organisation, so it is important to understand this context before any activity can be provided. The particular context of the organisation and the issues arising from the context provides the reality that the managers must face and any development must connect with it. The 'best practice' approaches of leadership development in larger organisations start from the wrong premise. For many SME managers the desire to be self employed greatly shapes their disposition to learning. The SME managers have to establish 'balance' between strategic and operational performance as well as between management and leadership. However, through their experiences of running their business, themes of loneliness and isolation are common. They have a desire to understand whether the ways they run their businesses is appropriate and this potentially opens a possibility to explore new ideas but there must be connection to the realities they face.

3) Respond to the time-frame as appropriate

It is important to understand a manager's thinking about time-frames. The reality is that most SMEs have extremely short planning horizons and order books that barely last more than one or two months at a time. Indeed, SMEs that operate at survival levels work with a time-frame that can best be summarized as 'here and now'. Thus strategy development and long-term business growth are, more often than not, relegated to the background or do not feature at all in the 'thinking' of SMEs. For such managers, attempts to move too quickly beyond immediate concerns are likely to be rejected. However, recent research has shown that there is a significant association between a SME's approach to strategic planning and its business performance and those who engage in a "strategic" approach to their organisations, working with time-frames from 1 to 5 years, are likely to be more profitable with a greater capacity to grow, innovate and develop new
products.

4) Determine the measurement and what is valued

How SMEs measure their performance is strongly connected to the response managers have to what they learn. The measures managers use can constrain and limit learning especially as research suggests that most SMEs find it difficult to participate in performance measurement projects because of the lack of time available for anything other than operational activities. Further performance measurement is narrowly focused, usually on financial and operational aspects with little awareness for integration or systemic consideration. Even where a performance model is employed, the implementation tends to be partial or incorrect - a consequence perhaps of most models being more suited to larger organizations. Measurement is not planned but is responsive to and emerges from solving problems, the consequence of which is that any measures that do emerge are past-oriented and developed to support control.

5) Stimulate entrepreneurship and stretch

SME managers are generally concerned with present interests, seeking to provide repair or improvements to current ways of working. It is important to assess existing capacity and capabilities and explore the potential for making an advance. Each manager will have a meaning for such advances, simultaneously providing the potential and limit for development. Attempting to move the manager too far beyond this point will be seen as inappropriate or unrealistic. However, over time, and through the development of relationships with others, it may become possible to gain command of new capabilities, setting a new and higher limit on the potential and limit for development.

6) Develop communities of practice

Learning by managers in SMEs most often occurs naturally by completing work and solving problems as part of an everyday process. Such learning is the by-product of a work process rather than the focus of the process itself and is shared with everyone involved in the process. The accumulation of such learning over time, and the meanings attached to what is done become accepted by everyone connected to the organisation. SME managers also like to learn with and from others who have similar concerns and face similar issues. There is a need for learning to connect to action and being able consider the possibilities with others who can understand the realities they face is more likely to lead to success. The social and interdependent dimension of learning is therefore crucial. Through conversations during which managers share information, seek help and generally give meaning to their work, collective knowledge is created which enables, sustains, constrains but also advances its practice.

7) Enhance belief, confidence and awareness

Any attempt to provide support for SME management and leadership development requires a space to attract managers into a conversation. Development interventions must recognise the need for appropriate language, appropriate learning contexts (often their context and other businesses) and a pedagogy that is premised on exchanges of experiences and ideas. There is the need to help managers identify how interventions relate to their business, how this helps the development of both the business and themselves, from which they can aspire to an appropriate identity. A key characteristic of this approach is the extent to which managers are able to set the agenda and influence the direction and speed of conversations according to their interests, gaining confidence as they do so. Similarly there is a need to reinforce the identity development process by focusing on areas of competence and skill development.


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